Fix It Again Tony - Please

Can the merger with Fiat be considered the last temptation of Chrysler?

By
Matt DeLorenzo, Editor-in-Chief

May 18, 2009

It may have been funny when Fiats were sold in America, but those who believe that Fiat stands for Fix It Again Tony may find the joke's on them when the Italian automaker is calling the shots at .

There's no denying that Fiat did leave the U.S. market in 1983 due to poor quality and sales, about the time Lee Iacocca was paying back Chrysler's first government bailout. And while Fix It Again Tony described Fiat's product line then, today the "It" means Chrysler, a company that seems to need fixing nearly once a decade. Few are optimistic given the DaimlerChrysler failed merger. However, low expectations also mean less pressure, as the successful marriage of and Renault has shown.

The man of the hour is Sergio Marchionne, who is perhaps the most unconventional leader of a major auto company today. Although he was born in Italy, he holds dual citizenship with Canada, having attended college, earned a postgraduate degree and started his career as a tax attorney in our neighbor to the north.

He chain-smokes, speaks accent-free English, hates ties and prefers sweaters to suit coats. He's also very blunt, predicting that within 24 months there may be only six major car companies left in the world. Marchionne took over a money-losing Fiat SpA in 2004 and within three years put the automaker back in the black. He did it through massive cuts, taking a hard line with labor and reinvigorating the product line with such hits as the Grande Punto and 500, stylish hatchbacks with a decidedly Italian flair. In Marchionne's Fiat, executives are expected to multi-task — heads of the various car units such as o, Lancia and also hold key posts with the parent company.

Marchionne's hard-charging style can also be seen in his approach to the Chrysler situation. There's much that Chrysler has to offer in the form of a ready-made distribution system and manufacturing plants that will allow Fiat and Alfa Romeo to return to the U.S. in short order. With General Motors teetering and the prospect of as many as four brands including , , GMC and being shut down or sold, that means there will be vehicle sales there for the taking, even in a down economy.

Among the Chrysler plants Fiat is most interested in is Toluca, Mexico, home of the . In its place, Fiat would build the diminutive , using the plant's lower labor costs to make money on this thin-margin entry-level car. Also, the recently revealed concept, which rides on a shortened version of the rear-drive LX platform, holds promise for a North American-built Alfa Romeo sedan, a prospect that cheers the Alfista in me. On top of it, Jeep is a perfect fit for Fiat worldwide since the Italian automaker has little in the way of SUVs.

Despite these attractions, Marchionne is not willing to gamble Fiat's newfound good fortune on an ill-fated American adventure. He knows that Chrysler's owner, Cerberus, and the U.S. government need Fiat more than the Italian automaker needs them. He said as much when he told both the United and Canadian Auto Workers to make further concessions to put its labor costs on par with the transplants or no deal. He's also looking for another $6 billion from the U.S. government to erase a portion of Chrysler debt before acquiring a 35-percent stake and management control of the ailing U.S. automaker. These are pretty stiff demands from an automaker that many considered a laughingstock not too long ago. But given the tenor of the times, either Fiat will be in the driver's seat at Chrysler or you can kiss yet another troubled automaker goodbye.

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